Should I File a Claim With My Own Insurance After a Car Accident?
My clients often ask me whether they should file a claim on their own insurance policy after a car accident. The most common fear is that their policy will be cancelled or that their rates will increase.
Auto liability insurance of at least $25,000 is mandatory in Georgia, however, there is a common misconception that the other driver’s insurance company is required act in good faith with you and cover your damages. I have found this to simply not be true. Liability insurance is only to cover you in case that you do something wrong. This generally means that your insurance policy will provide you with a legal defense against a claim and pay any judgment rendered against you up to the policy limits if you do something that might render you legally liable to someone else.
First party claims involve claims against your own insurance policy, also known as Uninsured/Underinsured motorist protection (“UM/UIM”). This situation arises when the other party doesn't have insurance, doesn't have enough insurance to cover all of your damages, or the liability policy has already paid their policy limits.
There is a contractual relationship between you and your own insurance company through your UM/UIM policy. The law imposes certain duties and obligations upon the company to handle your claim promptly, fairly, and in good faith because of this relationship. Any claim against your own insurance company is commonly referred to as a “first-party claim.” It is a first-party claim because the person making the claim is the one who is actually insured under the policy. Other parties' insurance carriers do not owe you these same duties and obligations. If for some reason the other parties' insurance carrier is causing unreasonable delay getting your vehicle repaired or replaced, it is usually quicker for you to file your claim with your own insurance company if you have comprehensive and/or collision coverage. Your own insurer will usually act more swiftly to get your car inspected, repaired, and get you a rental vehicle.
As the insured, you have a duty to promptly report any claims to your insurance company or your coverage could be denied or deemed waived. This could be a huge problem if at first you believed the other party had coverage but in reality they did not or coverage was denied. Additionally, because of the contractual relationship that you have with your own insurance company you own them a duty to cooperate with their claim investigation - this can include providing a recorded statement or other necessary documents.
Even if your insurance company pays on your claim, they can subrogate and seek reimbursement from the other driver’s insurance company. In the event they get reimbursed from the other insurance company, then they will refund your deductible.
When it comes to your insurance cancelling your policy because of a first-party claim please remember that most reputable insurance companies will not punish their insureds when they make a claim related to an incident where their insured was not at fault. You purchase insurance for your own protection and convenience. You pay monthly or semi-annual premiums expecting your insurance company to honor their end of the bargain and no one should blame you for using your own policy when you need it most.